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FTI backs plan to promote Thailand as consumer product hub
The Federation of Thai Industries is fully supporting
the government’s initiative to promote Thailand as a regional consumer
product center. As the regional hub, the country will be in a better
position to supply goods to neighbors, increase export-based revenue, and
reduce production costs, said Chatchai Boonyarat, vice chairman of the FTI.
The initiative was raised for discussion at a recent
meeting of the FTI’s Committee on the Industrial Strategy of which he is
a member. It followed the government’s proposed plans to allow the
country to become a regional hub for fashion, automobile production and
food products.
“Thailand is ready to become a regional center given
the fact that many foreign giant firms set up production bases for
consumer goods such as toothpaste, soap, shampoo and detergent and many
other products. Should they be able to expand export markets into
neighboring countries where there are a combined population of around 600
million, total sales of the products will increase ten times,” said
Chatchai. “Under the circumstances, the producers could raise production
capacity to reduce unit costs and Thai people could buy cheaper
products,” he added.
He said the initiative would also help boost the local
investment atmosphere and encourage foreign investors to shift production
bases for consumer products to Thailand. He added that in order to forge
ahead with the initiative, the government needs to improve and expand
transportation routes by linking them to major cities in neighboring
countries, instead of boosting border trade. (TNA)
NESDB revises economic growth upwards to 2-3%
The Thai economy is expected to grow 2-3% this year,
instead of 1.3-1.7% as projected earlier, as a result of increased private
investment and consumption, according to the National Economic and Social
Development Board.
Chakkramol Pasukvanich, the NESDB’s
secretary-general, said the country’s economy grew at the rate of 2.1%
of gross domestic product in the fourth quarter of last year.
The overall economy expanded 1.8%, higher than the 1.5%
forecast earlier. However, the growth rate was lower than that of 2000,
which stood at 4.6%.
Last year’s exports contracted by 6.9% to US$63.2
billion as imports declined by 2.8% to $60.7 billion, but the country
enjoyed a trade surplus of $2.5 billion and a current account surplus of
$6.2 billion with inflation rate of 1.6% last year. Investments increased
by 0.8% last year with private investment rising by 5.1% and state
investment contracting by 6.6%.
The NESDB decided to revise this year’s economic
growth upwards to 2-3% because private investment and consumption had
increased. The low interest rate had boosted consumption of durable goods
such as electrical appliances, motorcycles, vehicles, and buildings.
Exports are expected to rise again while the inflation
will remain low. The whole of investment was projected to rise by 4.3%
with private and state investment likely to increase by 5% and 3%
respectively.
Exports are forecast to grow by 2.3% to $64.6 billion
and the imports by 4.6% to $63.5 billion. The trade and current account
are likely to be $1.2 billion and $5 billion with inflation rate of 1.6%.
The NESDB warned that negative factors that could
affect the economic growth this year could be a price slump of farm
products due to drought, the reentry of non-performing loans and the
economic slowdown in Japan which could impede the export growth. (TNA)
Local auto parts market begins to recover
The local auto parts market has begun to pick up after
giant automakers decided to shift their production base for exports to
Thailand. Local parts producers are available in a large number to
accommodate the growing production base shift. This is a factor that could
attract more investment and boost the parts industry.
Toyota Motor Co, the giant Japanese automaker, has
recently set up its production plant in Thailand as part of its plan to
manufacture pick-ups in the country. The firm also plans investment for a
model change in 2004. The production base shift aimed at increasing
production for exports also bodes well for the local auto parts industry.
Italian giant automaker Fiat has also announced its
plan to move its production base for export to Thailand, reasoning the
country has good potential to become its manufacturing base because of the
numerous auto parts production plants already in place.
Thailand currently uses 80% local parts to produce
pickups and 75-80% to make cars. The increased ratio shows the local auto
parts industry has already begun to recover. (TNA)
Unocal agrees to cut gas price as demanded by PTT
Unocal Corporation has finally decided to reduce its
natural gas prices as demanded by PTT Plc., and company executives expect
an agreement will be signed early next month. However, the company would
not give an exact figure, pending report to its board, the Stock Exchange
of Thailand, and its shareholders, said industry minister Suriya
Jeungrungruengkit.
The agreement was reached after his discussion with Tom
Fisher, senior executive vice president of the United States-based oil and
gas explorer and producer. Suriya said Unocal agreed to cut gas prices the
largest extent it had ever done. Still, the decision was not derived from
a change in gas price formula under the contract the company made with
PTT.
He conceded a negotiation for the formula change was
not an easy task because it involves an amendment to the contract. But the
price cut would enable the government to reduce power bills and ease
people’s burdens. He said the price cut agreement was expected to be
signed early next month and would take effect throughout the remaining 10
years of the concession. He denied Unocal’s agreement to cut the gas
price was made so the company would be granted a new concession for gas
exploration and production. (TNA)
SET president dissatisfied with market capitalization
The Stock Exchange of Thailand’s market
capitalization remains relatively low in Asia, but its outlook is
beginning to improve as a result of the government’s continued efforts
to revamp the capital market, according SET president Kittirat na Ranong.
He said the capitalization of the local bourse is currently much lower
than many member countries of the International Federation of Stock
Exchanges.
Of the 15 members of the federation, Thailand ranks 13th
in terms of the market capitalization size, only larger than New Zealand
and Indonesia. In 1992 the SET was one of the key stock markets in Asia
with its capitalization representing 10% of the whole market
re-capitalization in the region.
The Thai stock market has dropped since the economic
crisis in 1997. Despite periodical rallies by other markets in Asia, it
continued to fall further. Still, with the current government’s
continued efforts to improve the local stock market in many aspects, the
overall picture is beginning to look more promising. (TNA)
Indigenous chicken to boost exports
The Chicken Raising Association of Thailand is set to
team up with the Livestock Development Department and the Research Support
Fund Office to develop an indigenous chicken as an economic animal to
promote the country’s exports.
After the signing of a memorandum of understanding of
cooperation among the three agencies, Chaveewan Kampa, the association’s
president said exports of indigenous chicken, particularly to Japan, are
earning the country around one billion baht a year.
However, chicken drew little interest from the European
Union despite the association’s efforts to conduct road shows overseas
to promote its quality and selling points as a delicious and
low-cholesterol product. She said Thai indigenous chicken was not popular
in Europe because it is more expensive than other kinds.
The entire process of raising chickens is closely
supervised by the Livestock Development Department to ensure quality
standards. The indigenous chicken needs around 3-4 months to grow before
being taken to market and sold for an average of 60-70 baht per kilogram.
Raisers must take special care of the chickens to prevent infection
otherwise production costs would be higher than other types. Chaveewan
said she was confident the MOU would lead to research and development of
the chicken, which could boost exports as well as local consumption of the
product. (TNA)
North Korea to buy more rice from Thailand
Thailand and North Korea have agreed on a new rice
deal, as well as cooperation in trade, investment, and cultural areas.
Rathakit Manathat, Foreign Ministry spokesman, recently announced that
Thailand agreed to ship 300,000 tons of rice to the Democratic People’s
Republic of Korea.
The deal, based on a two-year credit term, was clinched
during a meeting at Government House between Prime Minister Thaksin
Shinawatra and H.E. Kim Yong-nam, chairman of the Standing Committee of
the Supreme People’s Assembly of the Democratic People’s Republic of
Korea. Kim paid an official visit to Thailand this month as the guest of
the Thai government.
Under the deal, Thailand will ship 100,000 tons of 5%
rice at the FOB price of US$189 a ton and another 200,000 tons of 25% rice
at the FOB price of US%172 a ton to Pyongyang. Thailand will start
shipping the rice to Pyongyang by mid-year.
Public debts obstacle to Thailand’s credibility
Thailand’s credibility rating will not significantly
improve until there are clear signs that the government can achieve a
balanced budget and put a stop to the upward spiral of public debt, a
leading think-tank has warned.
A report published by the Thai Farmers Research Center
said that public debt can only be brought in line by a balanced budget.
The level of debt held by the Financial Institutions Development Fund (FIDF)
has reached an apex. Until a balanced budget is accomplished, Thailand’s
credibility rating is likely to remain at 1999 levels, the report warned.
Since 1999, Moody’s Investor Services has given
Thailand a continuous BAA3 rating, while the rating offered by Standard
and Poor’s has remained stable at BBB-.
However, the report offered a note of optimism, saying
that despite the deficit budget and the FIDF debts, if the economy is able
to go through a continuous and manageable revival, the problems of bad
debts held by the Thailand Asset Management Corporation (TAMC) would ease
off, which in turn would help solve the FIDF’s problem loans. This in
turn would help reduce the impact of any increase in foreign interest
rates in the immediate future. (TNA)
Emails flood government over tobacco company privatization
Members of the anti-smoking group Global Link have
begun an email blitz on the finance minister, warning that his plans to
privatize the state tobacco company could lead to an increase in smoking
among young people and the poor.
Dr Hatai Chitanon, president of the Thai Health
Promotion Institute and advisor to the Global Partnerships for Tobacco
Control, said that he had warned the global anti-smoking lobby about
finance minister Somkid Chatusriphitak’s plans to privatize the state
tobacco company.
Members of the Global Link group, which boasts members
in every country around the globe, are now bombarding the finance minister
with email messages opposing the privatization, he said.
Dr Hatai said that privatization would result in
cheaper and stronger cigarettes, warning that this could lead to more
people taking up the habit, especially the most vulnerable of society,
teenagers and low income earners.
One of the emails was from the director of the
Ukrainian Organization for Smoking and Health, who attached a World Bank
report on the privatization of the Ukrainian tobacco industry. According
to the report, the beneficiaries were wealthy multinational investors,
while hundreds of the company’s workers were laid off. The report said
that multinational companies tend to use imported tobacco, leading to loss
of jobs in the tobacco growing industry, and higher tar levels led to more
addicts.
Several of the emails sent pointed out that Thailand
had previously won a World Health Organization award for being the country
with the best anti-smoking campaigns in the world, and called on the
present government to think of the health of the Thai people. Dr Hatai
said that most of the emails were sent by high-ranking health
professionals and academics in the medical field. (TNA)
Australia ends anti-dumping measures against Thai refrigerators
Thammanoon Chiewsakul, director general of the
Department of Foreign Trade announced that Australia has ended its
anti-dumping measures against Thailand’s exports of refrigerators.
This is in accordance with an agreement on anti-dumping
and anti-subsidy of the World Trade Organization (WTO), indicating that
anti-dumping and anti-subsidy measures imposed by a country against any
foreign export must be ended within five years unless its domestic
industry calls for continued implementation of the measures.
Canberra imposed anti-dumping measures against
Thailand’s exports of refrigerators in 1996 after the Association of
Electric and Electronic industries of Australia lodged a petition,
claiming that their businesses had been damaged due to dumped exports of
the products from Thailand with cut prices.
“The move by the Australian government to end its
anti-dumping measures against exports of refrigerators from Thailand will
again provide a good opportunity for local exporters to sell their
products to the Australian market,” Thammanoon said. (TNA)
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